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Re: Catch-22 Software Cost

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At 10:12 AM 12/10/2004 -0600, you wrote:

On Dec 10, 2004, at 8:11 AM, Ken Peoples wrote:

If the work is Tekla related, I charge a higher hourly rate to take into account the cost
of the software, maintenance and training.
Presumably, Tekla makes your office more productive, so your office cost for the work is less than it would be without Tekla. Shouldn't you be splitting the cost savings between a fatter bottom line for you and a lower price or faster delivery to the client? That's a loaded question, of course. You hear a lot about the some change in doing things, especially if it's something like an annoying voice mail system or using sweatshop labor, always with a little tag line about passing the savings on to the customer. All bullsh¡t of course, since prices keep going up, but in theory that's what should happen

This begs the question (and ties into your response to the class-warfare email), are we providing a product-based service (an engineering design) or are we simply providing outsourced engineering manpower to our clients? If the scope of a job is well defined, then fixed-price implies the former, and hourly T&M implies the latter. For poorly defined scopes of work, the line blurs, as nearly every case will be a T&M situation.

In a small shop, especially, the hourly rate gets complicated. With no administrative personnel to lick stamps and copy transmittals, no drafting staff to take a napkin-sketch and get most of the lines into CAD, and no junior engineers to do the simple calculations and layouts, how do you bill? Is 20 minutes at the copier worth the same as 20 minutes examining a failure location in a structure for tell-tale signs of cause?

I've gotten good enough at drafting that I almost never do hand sketches anymore. The time I save putting most details into CAD tends to be close to a handsketch-drafter-redline-drafter-check sequence. If I spend admin time on a job, it means I don't feel bad when I round the final bill up to the next half-hour, or don't subtract a minute on the phone with a telemarketer from my time.

I try and do most of my jobs fixed price, and almost all of my jobs over two or three days effort are fixed. Some of my work really is like outsourcing though, and I probably had thirty jobs this year that I billed less than three hours on, but it's great advertising in a small town when every contractor knows who you are.

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